"California-Only" Diesel Will Come at High Cost for State, Study Says

April 25, 2012

Significant job losses will be directly attributable to California Air Resources Board's fuel policies, says a new study by the California Trucking Association. Goods movement and agriculture sectors will be especially hard hit if the policies are allowed to go into effect as currently designed.

The report, titled "The Impact of the Low Carbon Fuel Standard and Cap-and-Trade Programs on California Retail Diesel Prices" demonstrates the effect that CARB's regulatory actions will have on the state's retail diesel future leading to a $6.69 per gallon price tag.

The study, prepared by Stonebridge Associates, Inc., finds that by 2020, CARB's Low Carbon Fuel Standard, in combination with the AB 32 Cap-and-Trade Program, could increase the price of diesel fuel by $2.22 per gallon. That would represent more than a 50% increase in the price of diesel fuel and $6.69 per gallon at the retail pump. The average price difference between California and neighboring states would be $2.33 per gallon when accounting for taxes.

According to the study, between the year 2015 and 2020, these higher "California-only" diesel fuel costs will cause a loss of nearly 617,000 jobs in the containerized import sector, $68.5 billion in lost state domestic product, $21.7 billion in lost income and $5.3 billion in lost state and local taxes

California's transportation and logistics industry is responsible for almost 14% of the state's economy. However the study states that a "California-only" diesel price caused by CARB's program design will put California's transportation sector at a significant competitive disadvantage.

"CTA is supportive of the production and use of alternative fuels, but the cost gap between CARB's Low Carbon Fuel Standard and the diesel fuel that the other forty-nine states will continue to use is unacceptable," says Scott Blevins, president of Mountain Valley Express and 2012 CTA President. "This is a serious setback for any business dependent on diesel fuel for its operations.

"State regulators need to step down from their 'ivory tower' and understand the impact of these unfair policies on California truckers," Blevins says. "CARB's blind pursuit of policies that will drive many California-based trucking companies out of state or out of business should be of great concern to all Californians."

The report goes on to say that these diesel fuel price increases of this magnitude will cast an even wider net affecting food, fuel, clothing and other essential services transported by trucks.

"It simply makes no sense that here in California where we wake up every day to double-digit unemployment, businesses struggling to keep their doors open or wheels turning that CARB would intentionally impose policies that makes fuel more expensive," says Michael Campbell, executive vice president and CEO of CTA. "Higher fuel prices create an incentive for companies to fuel up outside of our state costing us jobs that provide for our families and critical tax dollars that fund our roads and transit programs."